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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






2. Entry of new firms shifts the cost curves for all firms upward






3. The difference between total revenue and total explicit costs






4. The lost net benefit to society caused by a movement away from the competitive market equilibrium






5. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






6. Ed = 8 - infinite change in demand to price change






7. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






8. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






9. A good for which higher income decreases demand






10. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






11. 0 < Ei < 1






12. The ability to set the price above the perfectly competitive level






13. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






14. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






15. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






16. Entry (or exit) of firms does not shift the cost curves of firms in the industry






17. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






18. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






19. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






20. Ed < 1






21. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






22. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






23. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






24. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






25. Models where firms are competitive rivals seeking to gain at the expense of their rivals






26. The sum of consumer surplus and producer surplus






27. The additional benefit received from the consumption of the next unit of a good or service






28. Ei > 1






29. Es = (%dQs) / (%dPrice)






30. The difference between total revenue and total explicit and implicit costs






31. AVC = TVC/Q






32. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






33. Demand for a resource like labor is derived from the demand for the goods produced by the resource






34. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






35. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






36. The rational decision maker chooses an action if MB = MC






37. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






38. Total product divided by labor employed. APL = TPL/L






39. Ed = 1






40. Ei = (%dQd good X)/(%d Income)






41. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






42. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






43. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






44. TR = P * Qd






45. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






46. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






47. The marginal utility from consumption of more and more of that item falls over time






48. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






49. When firms focus their resources on production of goods for which they have comparative advantage






50. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary